From Coal Giants to Jatropha Farmers

I recently came across a report by GlobalData discussing India’s extreme dependence on coal, and how the Indian government’s move to try to rectify a shortage in the country won’t work in short term.
By Anna Simet | June 27, 2012

I recently came across a report by GlobalData discussing India’s extreme dependence on coal, and how the Indian government’s move to try to rectify a shortage in the country won’t work in short term.

Apparently, the government has ordered the country’s largest coal supplier, Coal India Ltd., to sign fuel supply agreements with utilities in hopes that this will push the company to boost its output and ease the current coal supply shortage.

From GlobalData’s perspective, however, this won’t be a quick enough fix. Per the arrangement, CIL will sign contracts to supply at least 80 percent of the required coal to power utilities. If it should fail to deliver it will face a penalty of 0.01 percent of the shortfall of supplies, but that penalty will only apply after three years. “CIL dominates the domestic coal scenario in India, and it’s near monopolistic position results in supply bottlenecks and delays in coal field development,” the report says. “There is a growing need for a transparent and credible coal pricing policy based on global norms.”

Unfortunately, cheap coal imports aren’t something India can rest an elbow on. Indonesia accounts for 50 percent of India’s coal imports, according to GlobalData, and a new Indonesian policy stipulating the benchmarking of coal prices to international market rates will likely increase the cost of imports dramatically. And Australia, which accounts for 5 percent of India’s coal imports, has also issued a draft mining law to impose tax on coal and iron ore projects from next year.

In a nut shell, GlobalData is calling on the government to come up with some alternative solutions, ones that would either rescue the country’s coal industry or focus on renewable solutions.
On that note, I began to wonder what kind of biomass resources India has—it surely has land space, as it is the world’s seventh largest country—and also what its bioenergy industry looks like.

After doing some research, I was surprised to learn that biomass is actually second to coal in India, and provides 32 percent of all the primary energy use in the country at present. That’s mainly through combustion of wood waste, ag waste (rice husks, bagasse, rice and wheat straw) and livestock waste. Around 450-500 million metric tons of biomass is generated in India on an annual basis, according to Energy Alternatives India.

Among a myriad of factoids I could post, there are two things that stood out. The first is that the country’s biomass gasification industry is growing by leaps and bounds—it was actually first in the world for megawatts produced in 2006—and there is an aggressive push toward development of a jatropha market. 

Oddly, biodiesel isn’t even sold on the Indian fuel market yet, but I guess that’s why it makes sense. The government plans to meet 20 percent of the country’s diesel requirements with biodiesel by 2020, so it’s trying to get the program moving. Apparently several incentive plans have been put into play to entice farmers to rehabilitate wastelands through jatropha cultivation, but it hasn’t been an easy sell, mainly due to lack of confidence and certainty by farmers. 

Doesn’t that sound familiar?

Overall, it does seem as though the Indian government is attempting to nurture bioenergy in the country, as it also provides subsidies, tax breaks and loans for biomass power, biomass heat, cogeneration, ethanol and biodiesel, and many states have a renewable portfolio standard. But perhaps those things still aren’t quite enough.

With coal so domineering, it’s going to take a long time to make measurable progress, and that’s pretty much always the cases in countries trying to move away from fossil fuels and toward renewables.

It’s all about progress, though. While swift and long strides may be ideal, small and steady steps are better than none.